Whenever a district ceases to exist in any manner prescribed in this title, except when districts are reorganized under 20-6-423, the cash on hand to the credit of the funds of the district and the debts of the former district must be allocated in the following manner:
(1) Any cash to the credit of the district must be used to pay any debts of the district, including bonded indebtedness, except that any cash available in the debt service fund must be used first to pay bond interest and all outstanding bonds.
(2) If any cash remains to the credit of the district after paying its debts, the cash must be transferred by the county treasurer to the credit of the district or districts assuming its territory. When the territory is assumed by more than one district, the remaining cash must be prorated between the districts on the basis of the taxable value of the territory assumed by each district as determined by the county superintendent.
(3) If any tuition debt remains as an obligation of the district, the tuition debt is the obligation of the taxable property of the discontinued district, except when the tuition debt has been assumed by the newly formed or annexing district. The tuition debt must be financed by a mill levy on the property of the discontinued district and paid from these proceeds by the county superintendent.
(4) If any debts, other than bonded indebtedness and tuition, remain as an obligation of the district after the cash has been utilized under the provisions of subsection (1), the debts must be assigned in the same manner prescribed for the transfer of cash under subsection (2).